A key selling point that makes solar energy the fastest growing source of electricity in the world – with rapidly declining costs – has been hit at a rapid pace.
Solar module prices have risen 18% since the beginning of the year after falling by 90% last year. The reversal, triggered by a quadrupling in the cost of the key raw material polysilicon, threatens to delay projects and slow the delivery of solar power as many government leaders have finally handed over their weight. in an effort to slow climate change.
“Solar damage hasn’t been as bad in more than a decade,” said Jenny Chase, lead solar analyst with energy research group BloombergNEF. “Developers and government need to stop expecting solar to become cheaper.” BNEF slightly lowered its forecast for solar buildout this year in a report last week, citing rising prices of materials including polysilicon as a factor.
Higher prices have affected demand and could delay some large-scale projects, according to panel maker Canadian Solar Inc. in an earnings call on Thursday. In India, about 10 gigawatts of projects could be affected, equivalent to more than a quarter of the country’s current capacity, the Mint reported, citing unnamed developers. Large U.S. projects could also be postponed, Cowen & Co analysts said.
Projects that do not sign pricing agreements on equipment to purchase electricity may be delayed unless the customer is willing to pay a higher amount for electricity, according to Xiaojing Sun, a Wood analyst. Mackenzie Ltd.
For the solar industry, the time couldn’t have been worse. The renewed force finally has a White House champion and ambitious climate goals are being announced across Europe and Asia.
At the center of the crisis is polysilicon, an ultra-refined form of silicon, one of the most abundant materials on Earth commonly found on the coast. As the solar industry prepares to meet the expected surge in demand for the modules, polysilicon makers are unable to keep up. Prices for the refined metalloid reached $ 25.88 a kilo, up from $ 6.19 less than a year ago, according to PVInsights.
Polysilicon prices are expected to remain strong until the end of 2022, according to analysts at Roth Capital Partners including Philip Shen.
And the problem is not limited to polysilicon. The solar industry faces “widespread upstream supply-chain cost challenges,” according to panelist Maxeon Solar Technologies Ltd. in April.
The solar panels are made from sand that is heated and cleaned into ultra-conductive polysilicon ingots that are cut with thin razors, inserted into cells and then assembled into panels that line the roofs and cover many gaps.
Prices for steel, aluminum, and copper are also available, as are freight charges. Solar-microinverter supplier Enphase Energy Inc., said it expects most of the transmission to be controlled by the available semiconductor component.
“Under polysilicon, it’s very painful,” Canadian Vice President Xiong Haibo said at a conference in China, according to industry publication Solarbe. “Right now, none of the downstream companies are taking advantage and everyone is cutting production.”
However, the cessation of high -volume solar panels has in part continued to improve the efficiency of solar panels, according to Nitin Apte, the principal. executive officer of Vena Energy Pte. . The company does not plan any delays this year on solar projects across Japan, Taiwan, Australia and India.
“I see this as a short -term situation, and some projects can be seen to be consulted for our reasons,” Nitin said in an interview at his Singapore office. “We are not slowing down construction. We close orders at the lowest price we can get. ”
Over time, the shortage has encouraged the construction of new polysilicon factories, including this month’s announcement of what will be the world’s largest facility in China.
“One would expect that any material with a growth class containing polysilicon would continue to have the capacity to be injected into the system,” Nitin’s Vena said. “The challenge is to time the capacity to fully grow.”